COVID Treatment Update Lifts Market Mood

Charts (4)

Asian markets traded higher overnight and European bourses are pointing to a stronger start on vaccine optimism. 

Trading has kicked off the new week on the front foot thanks to vaccine optimism after the FDA approved the use of blood plasma from recovered patients as a COVID treatment option for coronavirus patients in the hospital. Whilst this is by no means that big coronavirus cure that the world is waiting for it is most certainly another step in the right direction.

Adding to the upbeat mood, Trump is considering bypassing normal US regulation to fast track the British vaccine candidate by Oxford University and AstraZeneca (AZN) for use in the US prior to the US Presidential elections. A vaccine ahead of the US Presidential elections would almost certainly give Trump’s campaign and popularity a huge, much-needed boost and comes as the Republican convention takes place this week. Timing is everything.

Today the economic calendar is light meaning that investors will be vulnerable to risk sentiment and coronavirus statistics. As the week progresses German GDP data and US GDP figures will be in focus ahead of the virtual annual Jackson Hole symposium which starts on Thursday. Here investors will be listening closely for clues as to where the Federal Reserve intends to take monetary policy.

Whilst recent US business activity and home sales data has boosted sentiment, there is a growing expectation that more monetary policy is needed to keep the economic recovery on track.

Europe 2nd wave fears to cap gains

Whilst vaccine chatter is boosting sentiment, alarm over rising coronavirus cases in Europe are expected to keep gains in check. France recorded over 4000 new daily cases on Sunday, its largest one day jump since mid-April. Spain has also seen an eye-catching rise in COVID cases with 8000 new infections being reported on Friday. The rise in infections in Europe comes as people travel for a vacation and attend summer gatherings. 

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